Bernanke is leaving. Why? Because he knows that unwinding the god-awful bubble that the Fed has recreated is going to be a fool's errand: all criticism and no joy.

We have used Free Trade (rather than Fair Trade, where tariffs are used to offset differences in pollution controls, wage regulations, workplace safety rules, etc.) as the tool to export our national economic health and wealth to slave wage hellholes overseas. Then we expected the Fed to use zero interest rates to restore what bad trade religion ruined. It's not possible. All we are getting is bubble/crash/bubble/crash cycles repeated ad nauseum. This bubble will last until it doesn't, then will crash harder than before.

11:07 am June 19, 2013

John Galt wrote:

The Bernanke/Obama policy of Zero Interest Rates forever is essentially a 90% tax on interest or ALL tax brackets. Elderly people who should be 90% fixed income are forced into a risky stock market because interest rates that should be 4% are 0.4%. Obama cannot afford for rates to rise because he pays off each month's MasterCard bill by putting the balance on Discover. Eventually, the scheme will collapse and the bubble will burst.

11:35 am June 19, 2013

Alvin Gropespan wrote:

Stimulate this Obameconomy?

It's like trying to find where to put the needle
in an addict's pock-marked arm.

11:40 am June 19, 2013

JW wrote:

Corporate profits at an all time high.
Stock market the same.

Wages as a share of GDP at levels so low we haven't seen them since the 20's.
Unemployment stagnant and absurdly high.

You know, if you ignore what the guy says about helping the middle class, and look at what he's actually done, Obama is the best Republican president we have ever had.

12:00 pm June 19, 2013

@JW wrote:

But Obama hasn't "done" those things.
Corporate profits and stock prices are at a high IN SPITE of him.
It is precisely because he is not any sort of leader,
but simply takes up space in the White House,
that companies are running themselves -- and running well.

However, as you say, many are unemployed and wages are low.
Companies are flooded with cash, but refuse to spend or make capital investments because of a complete lack of confidence in the political class.

12:45 pm June 19, 2013

Corporate profits and stock prices are at a high IN SPITE of him wrote:

Geitners handling of finance directly lead to massive cash stashing in large banks, without corresponding increases in hiring. Makes profits look very good indeed. And given the lack of any real reforms (even the few that were passed are being steadily eroded by lobbying efforts) they are free to continue their unregulated behaviors that lead to the crash. Add in the fed buying worthless securities to get them off the books...

Companies on the other hand have been given direct cash injections with no requirements for any reciprocal behavior. Free trade agreements have expanded. All of that after massive layoffs. Coupled with record low borrowing costs and you have massive profits if only due to lowered expenses and free money, rather than actual sales.

Then you have tax policy. While the upper income taxes have gone up a couple percent, capital gains remains incredibly low.

Basically, Obama's policies have allowed companies that had massive layoffs to use debt leverage to expand their profits without needing new customers, or with new demand coming from exports, all without driving any kind of hiring to boost opex costs. They have also taken much of the losses in worthless securities off their books by buying them even though they are junk. The shoring up of the financial sector and low rates pushed by fed policy has been a massive boon to large corporations and banks (and consequently markets) while doing basically nothing to spur demand in the greater economy which is what promotes hiring and wage increases for the middle class (and lower, for that matter).

It's true that Obama has stayed out of business' way by doing little in terms of new regulation, taxes, or programs, but you're just flat wrong that he hasn't instituted policies that have massively benefitted big money. He has, more so than any Republican ever dreamed.

12:56 pm June 19, 2013

JW wrote:

@12:00

One final comment:

Regarding the "companies aren't hiring because of lack of confidence..." Blah blah....

Companies hire when they are confident there is increased DEMAND. You don't expand your capacity (new workers) unless you think you will sell more.

This is Obama's fault, but only because he is engaged in austerity rather than stimulus. You cans drive demand with spending cuts because demand is a product of SPENDING!

2:31 pm June 19, 2013

@JW wrote:

Obama is "engaged in austerity" only because he is being blocked from doing what his party would prefer.
And a good thing, too.

There is not a single instance you can name where Obama "instituted policies that have massively benefitted big money." There is Federal Reserve policy, but that is not White House policy. Why do you confuse the two? Obama may even be about to replace Bernanke?

I never said "companies aren't hiring."
They are hiring very slowly, perhaps not even as fast as people are leaving the workforce.
I said they are not making capital investments.
Because, as you correctly say, there is no current demand to justify it.
There is no current demand because of a complete lack of clarity in our political class,
starting at the top and filtering down from there.

"Demand is a product of spending."
Whose?
And on what?
This country had a chance last November.
It blew it.

3:40 pm June 19, 2013

joseph wrote:

I don't know what JW@12:51 is talking about either. Geithner didn't do anything Hank Paulson hadn't already instituted in October and November of 2008.

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